Fears of brain drain at Bank of England's PRA as staff leave

Fears of a talent shortage at the Bank of England's financial regulator have been raised by new figures showing almost one in six staff leaving in the last year.

The Prudential Regulation Authority (PRA), which regulates Britain’s banking and insurance sector, has seen its annual employee turnover rate climb to 15.4pc, according to figures obtained by The Telegraph.

The revelations are likely to raise new concerns about the PRA’s ability to police the City, which industry figures have said could be affected by large numbers of staff leaving.

The regulator’s mounting workload, which includes devising capital requirements for the financial sector, setting rules on banker pay, and stress testing the banking sector, has meant some staff leaving for an easier and better-paying life in the private sector, according to former employees.

Meanwhile, banks and insurers are demanding an ever-growing army of staff to make sure they comply with financial regulation, often poaching them from the PRA itself.

The staff departure figures, obtained under the Freedom of Information Act, cover the 12 months to the end of November, and include freelance workers.

Not including contractors, the turnover rate was 12.5pc – up from 11.6pc during the year to March, and above the 7-10pc range deemed acceptable by the PRA.

A National Audit Office report into the PRA and its sister organisation, the Financial Conduct Authority (FCA), said last year that “current levels of staff turnover result in the consistent departure of skilled and experienced staff”.

The report said companies had warned the NAO of high levels of turnover “limiting the ability of supervisors to understand the firms they are supervising”.

The FCA’s turnover rate has fallen from 9.7pc in 2013 to 9.4pc in the last year, the regulator said in response to a Freedom of Information request.

The two regulators were formed in 2013 after the much-criticised Financial Services Authority was abolished. The PRA, which employs just over 1,000 staff, has admitted that staff retention is a problem, and in its annual report, chief executive Andrew Bailey said hiring qualified employees was a “significant challenge”.

As financial services companies grapple with an increasingly complex regulatory burden, they are hiring thousands of compliance staff, many coming directly from the regulators.

In 2013, Mr Bailey told MPs: “If you are supervising a major institution, you see them [regularly] and, of course, the institutions know who the good [employees] are and who the less good ones are, and they do bid for them.”

Other factors, such as the improving state of the wider jobs market, may have contributed to the rising departure rate. However, figures also suggest a growing workload at the regulator.

PRA employees clocked 3,952 hours of overtime in the eight months to November – an average of 494 hours a month and almost double the 263 hours a month registered in the 12 months to March.

This would suggest staff working longer hours, although since many employees are not eligible for overtime, it is unclear to what extent this is the case.

A spokesman for the Bank of England said: “The Bank of England and PRA continue to attract and retain a diverse range of talent from a wide variety of backgrounds and with extensive private and public sector experience.

“Last year the NAO recognised the skills of PRA staff in its first report into the new regulators.”